Interview with Damon Egan

Western Canada's largest Ford store 0:00

Steve Shaw: Welcome, welcome back to Fixed Ops Focus. Steve Shaw here with Dave Rogers, and another exciting time. We are here with Damon Egan. I don't know how it happened, Dave Rogers, but somehow people in Canada found out about us. So what do you think about that, Dave?

Dave Rogers: It's amazing. It really is amazing. I have a good friend who lives in Syracuse, and I always tease him that he lives in Canada. But now I'm actually talking to somebody who really lives in Canada. So welcome, Damon.

Steve Shaw: It's hard to believe. I have friends in Vermont, and they're always talking about being on the border, Vermont and New Hampshire. So welcome, Damon Egan. It's great to have you here all the way from the Great White North, and I'm sure you're freaking cold. Dave and I talk about the weather an awful lot. But anyway, let me say hi to you, Damon. Say hi to everybody, all five or six people who are watching. What's going on up there? How you doing?

Damon Egan: Well, I think it's probably more than five or six people, that's for sure, because I was able to find you pretty easily. It is a very cold day today. We've had a few centimeters of snow, and it is about five degrees Fahrenheit.

Steve Shaw: Well, you might have to explain to Americans what a centimeter is.

Damon Egan: OK, so we've had a couple of inches of snow today.

Steve Shaw: There you go. So you have a huge Ford store in Canada, is that right?

Damon Egan: Yep, we are Western Canada's largest Ford store. We've got 53 bays and 47 technicians. So a big, big operation.

Steve Shaw: I love it. That's awesome. Tell us something cool about your store. That's a pretty large undertaking. 47 techs and 53 bays is pretty monstrous.

Frictionless service, borrowed from other industries 1:38

Damon Egan: It is. When I got here 10 years ago, we subscribed to the old adage of "we've always done it this way, so that's the way we're going to continue to do it." I came in and decided I wanted to burn everything down to the ground and start again. We went from losing money to being 30% net to gross the first year, and it's not because of "we've always done it that way," the tried and true method. We like to use successful ideas from different businesses.

That is a big, big thing. The fixed operations business, whether it be parts or service, is not like it was even five years ago, let alone 10 or 20 years ago. It's now become more customer-focused, and it's about being frictionless. The whole operation has got to be frictionless to the customer. It's got to be frictionless to the technicians, frictionless to the advisors, frictionless to everybody. So how do we eliminate the pain points? Well, look at the industries that have mastered the elimination of pain points. The restaurant industry is number one.

Steve Shaw: I always say you've got to make it easy for people to spend their money. So I love that, frictionless. That's a great term. Somebody's going to have to steal that. Keep going, tell us a little bit more.

Damon Egan: Up in Canada we've got a thing called SkipTheDishes. Down in the States there's DoorDash or Postmates. Restaurants made it frictionless for customers to get their food without having to leave their house, and they pay a small convenience fee. That certainly sounds a lot like mobile service. Now, the big thing in the States is mobile service, but not so much in Canada. In all of Canada there are only 35 Ford mobile service units. I think Ed Roberts of Bozard Ford has more than that himself.

Dave Rogers: Yeah, he's got 50-something. You're right.

Damon Egan: So it is in its infancy here in Canada, but that's a great analogy right there, or pickup and delivery. We were the first ones in Canada to offer pickup and delivery. I'm going to give myself poetic license here: I stole the idea from Brian Benstock at Paragon Honda. Pickup and delivery has been fantastic for us, because we don't want customers coming into the dealership, drinking bad coffee and watching one channel of TV when they don't have to.

Dave Rogers: So tell me how you did that. It's not always as easy as everyone thinks. There are outside services, which can be quite costly, your red hat and different things. So how did you go about doing the pickup and delivery?

Damon Egan: Initially it started with COVID. As you know, the world shut down during COVID, so we didn't have a choice, but we had to keep the doors open. So I actually employed my daughter and her boyfriend to go pick up customers' vehicles, sanitize them and bring them back to the store. That's how it started, with two people.

Dave Rogers: So you sacrificed your daughter to get COVID from strangers? I like it. That's good.

Damon Egan: Well, she owes me about $765 million for all the pain and suffering over the years, so I've just put it on her tab. So we had a base. And then we get a phone call from Ford of Canada saying, "We hear you're doing this thing called pickup and drop-off. Explain it to us." So we explained it, and the next day Ford of Canada rolled it out nationwide.

Dave Rogers: That's it? You just told them on the phone? That's pretty wild.

Damon Egan: The next month, General Motors launched it nationwide. It all came from Edmonton, Alberta, Canada. Go figure. It was fantastic. But again, it's got to be frictionless for the customer. Now we're employing a contract driver service to pick up our vehicles and drop them off, because we're doing 500 to 600 a month now.

Dave Rogers: You said 500, 600 a month. So you have an outside company doing it now, like an Uber?

Damon Egan: We've got an outside company with drivers now. And the amount of goodwill it makes far outweighs the cost of the drivers.

Steve Shaw: And you just charge a fee for the pickup and delivery service?

Damon Egan: Nope, it's free. We get a little bit of money from Ford, but with a $1,300 average CP RO, I'll take that all day long.

Dave Rogers: Yeah, I agree 100%.

Empowering every employee 6:24

Damon Egan: So that's been a big thing. We steal from everywhere. The Ritz-Carlton has a policy that empowers every employee to make a guest's experience better. They don't have to go through a manager. They don't have to ask permission. They just do it. We empower our people the same way. We don't want our guests hearing, "I have to go talk to my manager, let me go see what my boss can do." We empower our people to make the decisions they need to make to keep the customer happy.

Steve Shaw: Let me ask you a question. How do you deliver that message to your people? Do you meet with them? Do you have a manager? How do you take that from you, the executives, saying "I want everybody to make a decision," down to the person driving the shuttle or your outside service? How do you convey that message so they feel empowered, liberated, whatever word you want to use, so they feel like, "I'm just going to take care of this customer because it's the right thing to do"? How did that happen?

Damon Egan: That's a great question. Anytime we hire somebody, it starts right there at the first interview. Not only are we interviewing that person, they're interviewing us on what we're all about. So that plays a big, big part in the interview process. We tell people, here's what you can expect working here. We're not going to make you sit here until six o'clock because somebody said you had to. We want your guests taken care of, and if everything's buttoned up and tightened up, you can go home, because we don't want to burn you out.

What we expect are our minimum requirements. We lay it out on the table very early and very quickly. If you come to work here, this is what's expected, and this is what we expect you to give to your customers. We're going to give you the power and the tools to make your customer happy, and we're going to back you 100%. We're not going to publicly make you feel bad. We're going to back you up, because you're going to have the customer's best interest at heart, and we know that. That's what we want, and that's why our CSI right now is top 10 in the country.

Steve Shaw: That's pretty good stuff. We used to talk about empowerment all the time, "We're going to let our people do all this," but I would say since COVID I haven't heard anybody talk about it in a long, long time. As a trainer traveling around, I always look at what I call the real world, outside the car business, for things that work and try to apply them to the business. What else do you do?

AI is augmentation, and process comes first 9:11

Damon Egan: Well, we are very, very big in, obviously, the buzzword of the year so far: AI. We were at NADA earlier in February, and that was the word everyone was using. Everybody had AI. Now, it's not that you have it, it's what you do with it. That is the biggest thing with AI. You can have all kinds of AI and do all kinds of things with it, but if it's not meaningful, what's the point? It just gives people more data to be dangerous.

And I'm sure, Steve, you see it in your travels: dealer principals or general managers who really don't know a whole lot about fixed operations get a bit of data because one of their vendors gave them a dashboard, and all of a sudden they know everything about fixed operations. Big, big problem.

Steve Shaw: What's funny is, you probably saw a couple of episodes ago we did the whole thing about process versus AI. I think that's the go-to: AI should enhance your process. You don't build your process around it.

Damon Egan: Exactly, it's an augmentation. I'll give you an example. The DMS we use is Reynolds and Reynolds, and to make Reynolds do anything, you've got to write what's called a dynamic report. Let's say I want to look at open work orders and work in progress and find out which advisor has the most open money and the most hours. I can't do that in the DMS, but I can take those two reports, filter them through AI and get a spreadsheet that tells me exactly that. That's augmentation to my process, and that's the kind of thing we need to be doing with AI. Not looking for answers, because it's dumb. It's what you put into it. The prompts you put into AI are the smart part. That's where we've got to be as leaders. We've got to be better.

I just want to touch on something you said, Steve, about process, because I hear a lot of people talking about culture: it's your culture, and you've got to feed good culture to people. Now, I'm going on a bit of a rant here, and somebody may not agree with this, but I'm going to tell you right now: if you do not have good processes in place and transparency with your people about what they have to execute on, you can have all the ping pong tables in the world. You can have all the sleep areas and fun times, but you're going to go broke. Processes first. Culture is 1A.

Steve Shaw: Well, I'm sure Dave could talk a little bit about the culture of LinkedIn, is what I would call it. It's funny, because we're going to have a master debate one time about leadership versus management. And I will say this to your point, Damon: when somebody tells me "I'm changing the culture," I'm just calling bullshit, because I think it's all crap. People throw that term "culture" around all day long, and most of them don't have a clue what it actually means. What do you think, Dave?

Dave Rogers: I agree. Internet experts, especially all these non-car-business people who post on LinkedIn and tell you all these things. I could go on a rant about that for a while. But you struck on something before: "that's the way we've always done it." Any store I've ever walked into, when people start saying that, the hair on the back of my neck stands up, and I immediately know I've got a lot of work to do. A lot of these businesses have been broken so long they don't even know they're broken. The people don't know they're broken. So it's great that you open up their eyes and expose them to new things.

A three-headed management team and 43% growth 13:31

Dave Rogers: Now, obviously you don't own the dealership, so you have a dealer principal and a management staff. What kind of organization is it? A single point? How does it work?

Damon Egan: A single-point store, and family owned. Dad's here six days a week, and the kids are heavily, heavily involved.

Dave Rogers: OK, great. And they allow you to do your thing? They have that same attitude about the store, letting employees do their thing?

Damon Egan: Yeah. One of the great things here is that as senior managers and the leadership team, we're allowed to really cut our own path on what we want to do. And they're good with it, because the dealer principal knows he has hired specialists to execute on the plan. That's what we do, top down, for a place this size with this many people. Between technicians and advisors we've got over 67 people in our department. For one person to handle all those people is very, very difficult. I think it's impossible.

So what we instituted this year was a three-headed monster. I've got an assistant manager who takes care of CSI and coaching the service advisors. I've got another assistant manager who is basically a shop manager. He controls throughput, controls the shop foreman, handles that stuff.

Let me break this down for you. We started this in December, because we knew our plan for 2026 was going to be really, really aggressive. We came up with a forecast for 2026 to grow 30%. In January, we hit 28%. Last month, we hit 43% growth: 1,100 more hours in February, and we broke over a million dollars in labor sales in February. The slowest month of the year.

Steve Shaw: Wow. So give me a couple of bullet points. How did you do that? You split off your management. How did that turn of events happen? It's amazing.

Damon Egan: Because I know what I'm not good at, and I know what I'm really good at, and I'm good at the analytics. We run our department like a professional sports franchise. I'm the general manager of the sports franchise, and I've got assistant coaches. My assistant coaches work directly with the players to get the best out of them, but we all execute on the same plan and the same culture. So if I've got players in my starting lineup who aren't cutting it, they're getting demoted or released from their contracts.

Steve Shaw: Dave, you want to take a swing at that before I do?

Dave Rogers: Yeah, I like it. I think that's the way you should run the plant when you've got a place that big. I was having this conversation at one of my stores today. The service manager himself is very technically oriented, trying to do everything by the rule book. He's trying to follow the manufacturer's guidelines, keep us out of trouble, make sure his schedules are clean and everything else. And I'm asking, who's out there selling? He's like, what do you mean? I said, who's out with the advisors making revenue?

It's great to have a good defense, back to our sports analogy. But I want to know who's on offense. I want to know that you're trying to sell, that you're trying to grow the business. They're telling me how they cut the appointments down to 20 in this store because they have 105 open ROs. In my mind they have a five-day supply at that rate. I'm like, you should have 50 appointments a day. What are you doing? Again, it was the defensive mechanism of a guy who's very technically oriented.

So I agree with you, Damon: play to your team's strengths and get somebody else in there. We've talked about this with head coaches in the NFL before. If I'm a defensive guy, I need a really good offensive coordinator to run my offense. Otherwise I'm screwed.

Damon Egan: That's exactly it. And this is where I think we run into problems on the fixed side, whether it's parts or service. We're told cut expense, cut expense, cut expense. But the sales department can spend $20,000 on a new VIN tracking tool, or a Facebook ad they don't correlate the leads from, while we cut expense, cut expense, cut expense.

Now, I do a ton of social outreach on LinkedIn, because I think it's better than Facebook for me. I get to correspond with guys like you. I do a lot of "hey, look at our dealership and what we're doing," because I think it's really important that we get some new ideas out there. We have to make people feel empowered, that they don't just have to live with cutting the spending and turning more hours. We've got to do some stuff that's really off the wall. We're the first ones in Canada using a parts delivery robot.

Everybody knows the daily numbers 18:51

Steve Shaw: I was going to ask you about that. Hold on to that robot question for a second, because I've got to interject something here. I won't bring up my favorite baseball team, the Cardinals. But what I find interesting is, you've talked about growing your business. You've brought up the word culture repeatedly. You've talked about the direction of the store. You did refrain from saying the word "vision," which Dave doesn't allow me to say anymore.

That's why I asked you the first question, about how you disseminate the message. So many people, when they talk about culture, skip the alignment, from the dad all the way through. He hired his executive team, the executive team does what they're supposed to do, and then you get down the line and everybody's got a role to play. I love every bit of that. But I'm curious: do you have meetings with people? Do you regularly communicate? How do you keep everybody on the same page? Is it self-propelled now? How do you keep the machine going like that?

Damon Egan: That's a great question. Let me step back one step. I love sports analogies, because I'm a huge baseball guy. We tell people when they come to work here: this is like playing for the New York Yankees, where excellence is everything. If you're not prepared to be excellent at what you do, you can't work here. I don't care what numbers you've got. If you're not prepared to execute on the plan, you can't work here.

And we do this daily. Not every week or every month. Daily. Everybody knows the mission. If you ask any of my staff, they're going to tell you that to achieve 30% growth this year, we need $7 extra on the effective labor rate. We need 0.6 of an hour. We need an extra 400 hours per advisor per day, and we've got to do 435 hours a day at a $145 effective labor rate to hit our target. Everybody sings off the same song sheet, plain and simple, and we drill it in daily. But we give them the tools to excel. I can't ask them to do 30% more and give them 30% fewer appointments.

Steve Shaw: Absolutely. And that brings in the pickup and delivery, and the mobile service we talked about in our emails, and now the robot. I'm sure Dave has a question about the robot. You're giving your people the tools they need to achieve the goals that were set out. Dave?

A parts robot and 3D-printed special tools 21:50

Dave Rogers: Well, I've actually seen the robot in a store before. But I'd like to hear from you. It's new, and I'm sure you're working out the bugs. I'm sure there are a few pluses and minuses. How are your techs taking it? How much has it helped?

Damon Egan: We've had it just over a week now, and we'd been in talks with Reynolds for a few months to get one, because we want to be number one in Canada for everything. We brought RedCap to Canada, we brought BusyCar to Canada. We've brought a lot of stuff to Canada, and Relo was the first robot in Canada. What we did was talk to all the technicians and ask, if there was a pain point we could fix, what would it be? They said, "We don't want to walk to the parts department, stand there and wait for our parts, walk back, and then have to go back because something's missing."

OK, great. How do we fix this? I happened to see a post on LinkedIn about a robot. I got in touch with our Reynolds guy: I want a robot. Great, set it up. It's saving five and a half hours a day, a week in. Five and a half hours. Now take that five and a half hours at your effective labor rate times 21 days. There's the math.

Dave Rogers: Right, it's easy. It only costs, what, 1,500 bucks a month? That's a rough number. It's half an employee, really, if you think about it.

Damon Egan: Yeah, it's nothing. And if we were going to hire a kid at 15, 16 bucks an hour to run parts, he's not doing it as efficiently, and he's going to call in sick, or tired, or take a holiday for his birthday or whatever.

Steve Shaw: Well, what's more impressive than anything is that you asked them what they needed. You didn't come in and say, "I have this great idea, I think I'm going to put a robot in my store because it's cool." Your people said, "We don't want to walk to parts," and together you made a decision, or you allowed them to decide what they needed. So many times I hear this stuff. I have a degree in leadership, and I don't really talk about it that much.

Dave Rogers: That explains it.

Steve Shaw: Would you like to see my doctorate in human behavior and organizational leadership? I sort of chuckle, because most people don't follow that same approach. Dave and I keep threatening to do a podcast about management versus leadership. I keep falling back to the communication. It's the discussion with your teams: what do you guys want? What can I do for you? Be a servant, and go out there and actually do it, not just post about it on LinkedIn. So congratulations to you guys for doing that. Tell me something else. I'm intrigued. What else did you bring inside from the outside?

Damon Egan: Oh boy. Well, one of the cool things we do: Ford Motor Company, like every other manufacturer, has special tools you've got to buy at a hugely inflated cost. Here's the problem. They come in a big case with three or four tools in it. Rather than taking the whole case to a technician's bay, the techs take pieces out, and then they don't put them back, or they break them, or they lose them, or somebody needs one and has to go running around for it. So we took the 10 most common special tools we use at our store, bought a 3D printer and made them. We made our own special tools.

Dave Rogers: That's pretty cool.

Growing technicians with revenue sharing 26:03

Steve Shaw: Wow, that's very impressive. I've got a question about your structure. Dave brought that up earlier. I love everything you say, and it just warms my heart. And the one thing you could bring from the United States to Canada: Steve Shaw has never been to Canada on an official assignment. So if you want to bring Steve Shaw up, that would be cool too. But that's a whole other story. What's your shop structure? Obviously with 47 technicians you're not just on central dispatch. How do you structure your shop?

Damon Egan: Come on up. We are on central dispatch. We use Reynolds automatic dispatch.

Dave Rogers: Using Reynolds automatic dispatch? Wow, that's impressive. I've never seen that one work well, so that's good.

Damon Egan: I know down in the US you guys have a technician shortage problem. Everybody talks about it. My goodness, I've got a friend who runs a BMW store in Louisville, Kentucky, and he's paying so much money that I would go to school to become a technician to go down there. We grow our technicians here.

Now, I come from an import background, where everybody does everything. You could be doing a transmission in the morning and trim work in the afternoon. In the domestic world, it's more "I'm the trim guy" and "I'm the transmission guy." So how do we keep people going and get them involved in the trade? How do we make them better techs? Telling a first-year or second-year apprentice to go clean the floor and empty the garbage because that's what you are is not the way to do it. We need to empower the technicians and really understand what drives them. What drove our generation was "bill more hours, make more money." To these guys, that's not the answer.

It's not "I'll bill more hours." It's "I'll cut corners to bill hours because you told me to, and I'll have more comebacks, and I'm not a good technician." So why don't we treat these guys the right way? What we do with our technicians here is revenue sharing.

Instead of "if you hit this many hours, I'm going to give you a $1 or $2 an hour bonus," which is antiquated, think about what the technicians are doing. They're bringing in revenue to the store. Every time a car goes into that bay, it's revenue to the store. I treat my shop like a mall. I own the mall, and all the technicians rent a store in my mall. The rent is due on the first of the month. Get to the revenue number we have to get to, and if you're over that revenue number, I'm going to share it with you. Technicians have the ability to get up to 3% of the revenue they bring in. Now they're way more invested than getting $200 if they hit 200 hours, or 300 bucks.

Steve Shaw: Wow, that's pretty awesome.

Damon Egan: We are building our technicians to be entrepreneurial, to be business owners. We've got technicians not only shooting their own videos for video MPI, but leaving business cards in the cup holder. They're adding lines to the work order: "It's me, XYZ, your technician. Ask for me when you come in next time." They're being entrepreneurial. That's what we have to do. We've got to teach these guys some business sense, not just to bust knuckles on wrenches, because those days are going by the wayside.

Steve Shaw: That's amazing. There's a lot more we could dissect with you. I love everything you're doing, quite frankly, and I'm sure a lot of our audience is impressed as well. Dave, what are you thinking right now?

Dave Rogers: I think that's a great idea. I'd love to know how you account for it and keep track of it once you get to a certain rent factor and so on, but it's an interesting concept. We've tried different things. We do have the incentive bonuses. We have a jingle fund at the end of the year for the technicians, for retention, where we give them, say, a dollar an hour for every hour they turn for the year. But it's funny you say that, because years ago, in the old days in the United States, technicians got 30% of the labor sales. That's how they were paid from day one, and that's where the 70% gross profit came from originally. If you look in the back settings of almost any DMS, there's a setting to give them a percentage of the sale, and that's how it's costed out. What's old is new. I love that percentage. That's pretty good.

Damon Egan: Boom. Probably one of the most intriguing things we did for our technicians was start a tool credit for them when they complete schooling through Ford Motor Company. The more proficiencies they had and the better technicians they became, the more money per hour billed we gave them to use on the Snap-on tool truck or the Matco truck. I've had guys get $3,000 or $4,000 last year just on the tool trucks. I think it's a great motivator to get them to do their schooling, either online or in class, and it makes them better technicians to use those skills.

Why fixed operations beats the sales floor 31:17

Steve Shaw: So Damon, when we brought you on, you gave us a little background. You came from the sales side, and Dave Rogers has a big sales background too. I've seen more and more people going from fixed over into sales. I've got a couple of buddies who made that leap from service advisor or manager into GM, which Dave did, and now he's back. What would your message be to somebody on the sales side about fixed operations?

Damon Egan: I would encapsulate it like this: you're going to see more customers in one day than you would in a week on the sales side. And they're captive customers. You're not going out and hustling to get somebody through the door. You get to make way more friends on the service side than on the sales side. As glorious as the dealer principals or general managers make it sound, "You sold a car, that's great," you're not going to see that customer for three or four years until they bring it back. I'm going to see them every six months. I'm going to have the better relationship.

Steve Shaw: I guess you have a pretty good sales-to-service handoff, from buying the car to the service department, or salespeople in the drive. Do you have something like that?

Damon Egan: We just started a program in January where we're offering everybody who buys a vehicle from us their first service free, and we do it mobile.

Dave Rogers: Wow. How many mobile vans do you have?

Damon Egan: Just the one, but we're ramping it up to go 24/7, because we've got some very big fleet customers. So we're going to be running two shifts on the van, and we were actually just talking about another one today.

Steve Shaw: Well, we're running a little bit long here. We try to keep it condensed, because most people on our side of the business have a short attention span, us included. Dave usually wraps us up with the GM tip of the day, and I hope you don't mind me speaking for you, Dave, but Damon, what would you say to a GM about fixed ops, somebody who doesn't have the background you have?

Damon Egan: Let your people do what they do best, and let them create. Don't put them in a box, and don't just play it with "we've always done it that way."

Steve Shaw: Awesome. Dave, how about you? You want to wrap us up?

Dave Rogers: No way. Damon just said it. Nothing to add to that. That's perfect.

Steve Shaw: Well, Damon Egan, it was great to have you on our podcast today. I hope everybody listening is as impressed as I am. In my travels I meet a lot of people, trust me, and you rank right up there, man. Great job, and kudos to you for all the things you're doing. Where can people find you? You said you spend a lot of time on LinkedIn.

Damon Egan: Yeah, you can just search my name on LinkedIn. I'm on there posting all the time. Actually, I let AI do my posts for me. I know. But again, it allows me to do it that much quicker and that much faster.

Steve Shaw: Good for you. Awesome. Well, thank you again for joining us and sharing some of the great things you're doing up there in Canada. I did my very best to refrain from any Canadian jokes. It was great having you on today. Dave, I guess we'll pick this up again next week. Thanks, Damon. Thanks, Dave.

Dave Rogers: Yep. See you guys. Thanks for joining us. Appreciate it.

Damon Egan: All right, thanks, guys.